Advertisement
Politics

Obama, GOP Will Find Common Ground

Even in this toxic political atmosphere, Democrats and Republicans will work out at least some legislative deals,

Conventional wisdom foresees near total gridlock in Washington for the next two years as the politics of 2012 takes hold. Bipartisan conciliation is nowhere in sight.

There is a measure of truth in that outlook. Republicans are energized and emboldened by retaking the House and gaining leverage in the Senate. The Democratic caucus, especially in the House, is more liberal as a result of election losses by centrists. The Republican caucus is more conservative and less inclined to seek big bipartisan compromises.

Advertisement - Article continues below

Even so, there are some areas where agreement is likely once the new Congress gets under way. Expect some of them to be included in President Obama’s State of the Union address early next year.

Trade.Three free trade agreements have promising odds. The first is with South Korea, despite Obama's missing his self-imposed deadline to work out specifics last week in Seoul. Obama says he expects that he and South Korean President Lee Myung-bak will settle their differences "in a matter of weeks." Look for Obama, who will promote free trade with South Korea as an overall job creator for the U.S., to send the pact to the Senate for ratification next year. Republicans and many Democrats will back it. Odds favor approval of FTAs with Colombia and Panama as well, although they require more work than the South Korea pact.

Advertisement
Advertisement - Article continues below

Debt limit increase. It won’t happen easily, but it will happen. Sometime in March or April, a debt limit increase will be needed. Conservatives and many Tea Party-backed freshmen will oppose it, saying Congress must put a brake on more massive spending. But not passing a higher debt limit would be deemed perilous. Leaders in both parties will allow members to vent on the subject of the debt. But they’ll also clear the way for passage, saying the “faith and trust” in the American dollar and national commitments are at stake.

Advertisement - Article continues below

Afghanistan. Both sides will agree to provide more supplemental funding for the military operation in Afghanistan. Antiwar liberals and some conservatives will question the merits of more spending for a prolonged effort in Afghanistan, but will, in the end, find it hard to vote against funding for troops. Republicans will aim to water down the administration’s stated policy to begin withdrawing troops in July. Obama will agree to make the withdrawal date more flexible and base it on the advice of military commanders instead of the calendar.

Transportation. Bipartisan agreement on a massive renewal of highway and surface transportation aid looks certain, probably in 2012. The specifics need to be worked out, but the legislation draws support in nearly every corner of Congress. Hundreds of surface transportation projects, benefiting every congressional district, will be funded through this legislation.

Energy production and investment. Some aspects of natural resource development will always be controversial, but there is an expectation that Obama, House Republicans and many Democrats in both chambers will be on board for limited energy expansion bills. Obama is already signaling Republicans that he will support more nuclear power. There may be agreement to limited new oil and natural gas production on federal lands, including in Alaska. Also, both parties and the White House may be able to form a consensus to expand federal research investment and tax breaks for developing alternative energy, including wind, solar and hydropower.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

Domestic spending. Republicans want to cut tens of billions of dollars from domestic, nondefense discretionary spending. Obama and Democratic leaders will aim for a slight overall increase. They’ll meet somewhere in the middle, perhaps agreeing to a 1% to 2% overall increase -- less than inflation. Republicans will be able to claim they started to put the brakes on federal spending. Both parties will be able to cite some spending reductions, even if there is a small overall increase.

Health care. Repealing the health care law is out of the question. Republicans will certainly try, but getting 60 votes in the Senate is a stretch, and even if they could find the votes, Obama would certainly veto the bill. But look for Republicans to bring down some specific provisions. One thing both parties can agree on is watering down or striking language that requires businesses to report payments of more than $600 to other businesses for goods and services. Most lawmakers on both sides of the aisle call the requirement ill considered, and business lobbies are pressing for prompt action to remove it from the books. A deal on medical malpractice reform is also not out of the question, though much negotiation would be required.

Advertisement - Article continues below

Farm programs. A new farm bill seems likely to pass at some point, but not before deficit hawks chisel away at it. As part of the deficit reduction effort, expect both parties to agree to trim some product subsidies, direct payments and agricultural research. Farm bill politics is more regional than partisan. While details and deals won’t be worked out for some time, count on lawmakers from the Midwest and South to join with the White House to clear a path for a slimmed down bill during the next couple of years.

Weapons programs. Obama and the top Pentagon brass will propose cuts -- not deep slashes, but some trimming in programs such as combat jets, submarines, missile defense and military space research. Figure on several influential Republicans, such as Sens. John McCain of Arizona and Richard Lugar of Indiana, and incoming Senate freshmen, such as Marco Rubio of Florida and Rand Paul of Kentucky, to join Democrats and the administration in paring some costly items that are not vital to ongoing military operations. Senate Armed Services Chairman Carl Levin (D-MI) and the likely next chairman of the House Armed Services Committee, Howard “Buck” McKeon (R-CA) will work together and with the administration on specific reductions.

Advertisement

Most Popular

2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 1, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Searching for the Perfect Place to Retire
Empty Nesters

Searching for the Perfect Place to Retire

We home in on two places with less traffic and lower costs. 
July 2, 2020

Recommended

Travel Planning in the Time of Coronavirus
business

Travel Planning in the Time of Coronavirus

Insurance may not cover canceled vacations, but airlines and hotels may be flexible.
June 11, 2020
13 Things That May Soon Disappear Forever (The Pandemic Edition)
business

13 Things That May Soon Disappear Forever (The Pandemic Edition)

Emerging technologies (and now the COVID-19 pandemic) are putting an end to these familiar items and practices.
June 9, 2020
Don't Let the Drama Surrounding PPP Distract You from Running Your Business
business

Don't Let the Drama Surrounding PPP Distract You from Running Your Business

If you're so wrapped up in worry about your Paycheck Protection Program loan not being forgiven, think about the worst-case scenario. It might not be …
June 5, 2020
Another Epidemic to Worry About: Identity Theft
business

Another Epidemic to Worry About: Identity Theft

Fraud losses grew in 2019 and are likely to increase in 2020.
June 5, 2020